Ask the Insurance Expert – Garry Dyck Agent/Owner
Creditor Insurance vs Personal Insurance
Most families who own a home and have a mortgage on it, have creditor insurance. What is it exactly, and how does it differ from personal insurance?
Underwriting – creditor insurance – if you have just checked a couple of boxes asking general health questions, this is not underwriting. Lenders often underwrite at time of death, which means you are not guaranteed to have life insurance.
A personal policy is underwritten at the of application and will include: medical history and questionaire, possibly a doctor’s report and your blood work. You know on issue that you have insurance and peace of mind!
Cancellation – The lender owns the creditor insurance and it can be cancelled by them at any time for many reasons. Personally owned insurance is owned by you, and as long as you pay your premiums, you only can cancel it.
Convertible – Creditor insurance is not convertible. When your debt is paid, you don’t have insurance. Personal insurance can be converted at any time prior to age 71 or renewed for a longer period of time with no further underwriting.
Beneficiaries – Beneficiaries are those who receive the insured amount at time of claim. Creditor insurance, if it pays, pays the lending company and the family receives nothing. Personal insurance, you own and control and you decide who the beneficiaries will be.
Personal mortgage insurance has many additional benefits over creditor insurance. It is important to meet with a licensed insurance professional to review the product best for you.
Call Bridge Insurance at 403-382-2818 to talk to our insurance professionals about all your insurance needs